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TGSV ENTERPRISES, INC. <br /> <br />NOTES TO FINANCIAL STATEMENTS <br /> <br />DECEMBER 31, 2017 <br /> <br /> <br />1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) <br /> <br />Property and equipment (continued) <br /> <br />When assets are retired or otherwise disposed of, the cost and related accumulated <br />depreciation are removed from the accounts, and any resulting gain or loss is recognized in <br />income for the period. The cost of maintenance and repairs is charged to income as incurred; <br />significant renewals and betterments are capitalized. <br /> <br />Impairment of long-lived assets <br /> <br />The Company reviews long-lived assets for impairment whenever events or circumstances <br />indicate that the carrying value of such assets may not be fully recoverable. Impairment is <br />present when the sum of undiscounted estimated future cash flows expected to result from <br />use of the assets is less than carrying value. If impairment is present, the carrying value of the <br />impaired asset is reduced to its fair value. During the year ended December 31, 2017, there <br />were no impairment losses recognized for long-lived assets. <br /> <br />Income taxes <br /> <br />The Company and its stockholders have elected S Corporation status for federal income tax <br />purposes. Under this election, the taxable income of the Company is passed through to its <br />stockholders to be taxed at the individual level rather than the corporate level. Accordingly, <br />the accompanying financial statements do not include a provision for income taxes. <br />However, the Company generally distributes funds to the stockholders through capital <br />distributions to pay income taxes attributable to corporate earnings. <br /> <br />The income allocable to the stockholders is subject to examination by federal taxing <br />authorities. In the event of an examination of the income tax returns, the tax liability of the <br />stockholders could be changed if an adjustment in the income is ultimately determined by the <br />taxing authorities. <br /> <br />Management has determined that there are no uncertain tax positions that would require <br />recognition in the financial statements. If the Company were to incur an income tax liability <br />in the future, interest on any income tax liability would be reported as interest expense and <br />penalties on any income tax would be reported as operating expense. <br /> <br />See independent accountants’ review report. <br />-8-